Red Lea Chickens staff left in tears, waiting on money after company enters voluntary administration

More than 500 workers in Sydney have had their jobs terminated after the collapse of Red Lea Chickens, which has been placed into voluntary administration after 60 years in business.

Workers from the Blacktown processing plant and Sydney retail stores were told their jobs no longer existed in an email sent to them over Easter and now face a wait for money owed.

The administrators say Red Lea’s financial position is unsustainable after the business’s investors withdrew funding and they have launched an investigation into the company’s affairs and the reasons for its financial failure.

The franchisee network of 22 stores will continue to operate with retailers considering options to secure alternate suppliers, but those in six company-owned stores are now out of work.

Connor Smith, who was a retail store manager for nine years, said his staff were in tears.

“They didn’t expect the closure to happen so suddenly,” he said.

“That was the killer.

“It would have been more professional if we were notified on a proper weekday, on a proper business day, and got a phone call.”

Many workers are questioning how they will pay rent or afford the basics as there is an immediate freeze on pays being deposited in accounts.

Wages owing and entitlements will be worked out and paid during the formal winding down process, but Mr Smith fears it will be a long wait.

“My staff are at home eating two-minute noodles for dinner,” Mr Smith said.

“And the worst thing is I can’t do anything about it.”

An unchanging business?

Red Lea distributed fresh and cooked chicken products to their stores and also supermarkets, specialty butchers, restaurants and hotels.

Mr Smith said overtime he had seen a gradual fall in business, and often came across company credit issues when communicating with suppliers.

“You would have to be blind not to see this coming,” he said

He said the business’s failure may have been partially due to big supermarket competitors like Coles and Woolworths and Red Lea’s inability to change with the times.

“They were doing the exact same thing for years and years.

“No new products, no new direction.

“Trends change and they never caught up.”

Red Lea was founded by John Velcich, a teenage refugee from Croatia, who sold the company in 2016 due to shrinking profits.

A creditors meeting will be held next week.

Article by Paige Cockburn – ABC News Online

Get your RentWise Report Today!

Is your first step when starting or renewing a lease. We aim to provide you with a powerful tool that will assist in planning and managing your lease